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REIT penetration in office market can reach 25-30% by 2030, up from current levels of 16%
REIT penetration in office market can reach 25-30% by 2030, up from current levels of 16%

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500 msf of office assets are REIT-worthy, including over 130 msf of stock already listed under existing REITs. REITs can potentially unlock additional 371 msf of Grade A office space.

 

India’s Real Estate Investment Trust (REIT) market is steadily progressing from a “Nascent” to “Early Growth” stage, with close to 140 million sq ft of real estate assets including office and retail spaces already getting listed. According to Colliers’ latest report, “REITs Unlocked: Accelerating India’s Real Estate Maturity”, the four listed office REITs currently encompass close to 133 million sq ft of Grade A office space. Additionally, about 371 million sq ft of office assets, accounting for about 46% of the existing Grade A stock, can potentially come under future REITs. Amongst the top seven cities, Bengaluru accounts for the bulk of additional REITable stock with a share of 24%, followed by Hyderabad at 19%. Furthermore, existing REITs have around 34 million sq ft of under construction supply and this is likely to become operational in the next 1-2 years. Overall, Indian REITs continue to pick pace, especially in the office sector, supported by new listings, broadening of occupier base and growing institutionalization in the segment.

 

 

Interestingly, at a micro market level, about 223 msf or 60% of the additional REITable office stock lie within Secondary Business Districts (SBDs) of the top seven cities in India. Amongst these SBDs, Bengaluru leads with a share of 36%, followed by Hyderabad at 29%. While the additional REITable stock is predominantly concentrated in SBDs and Peripheral Business Districts (PBDs) of major cities, about 14% of Grade A buildings in Central Business District (CBD) localities have the potential to be listed as future REITs. 

Micro market profile of REITable stock

 

Tenant quality drives occupancy levels and average rentals of properties under REITs

Mirroring the resilience of India’s commercial real estate sector, office REITs continue to demonstrate strong operational performance amid global uncertainties. With occupancy rates exceeding 86%, demand for premium office spaces remains robust. Steady rental income growth, underpinned by long-term leases and high tenant retention, further reinforces the credibility of REITs in the Indian office market.

Tenant profile of existing office REITs

 

REIT market in India still relatively smaller compared to other global markets

Globally, REITs across APAC, Europe & America have expanded into multiple assets such as office, retail malls, industrial warehouses, hospitals, residential apartments, data centers etc. Currently, Japan and Singapore are relatively established REIT markets in the APAC region with investors having access to a diverse set of underlying real estate assets. However, REITs/ Infrastructure Investment Trust (InvITs) market in India is relatively smaller in scale and have listed office, retail and warehousing portfolios within the trusts. The regulatory environment in India is strong and REITs can ultimately expand to newer asset classes. Interestingly, SEBI has been championing the case for Small and Medium Real Estate Investment Trusts (SM-REITs) in recent years.

Increasing diversification and integration of ESG practices in Indian REITs

REITs in India are increasingly diversifying beyond office spaces, driven by a combination of investor demand for higher yields, the need for portfolio resilience, and evolving real estate dynamics. Going ahead, similar to mature markets REITs and InvITs in India can potentially further expand into segments such as retail, warehousing, hospitality, and even data centers. Additionally, with a track-record in mature markets, rental housing segments such as senior housing, co-living, student housing etc., can become futuristic REIT bets in India as well.

Currently, 86% of operational office portfolios under existing REITs are green-certified, reflecting strong alignment with international sustainability benchmarks. Over the next few years, Indian REITs are targeting green certification of their entire portfolios. They also aim to increase renewable energy usage by 30–35%. Overall, these measures reinforce their appeal to ESG-focused investors and can play a pivotal role in the next growth phase of Indian REITs.


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Colliers India
Sukanya Dasgupta, Head Marketing and Communications - sukanya.dasgupta@colliers.com

Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 66 countries, our 18,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20% for shareholders. With annual revenues of $4.5 billion and $98 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors, and our people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.



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